* Ahold Q3 EBIT 262 mln euros vs forecast of 250.6 mln
* Reiterates 2008 margin targets
* Says vigilant on changes in consumer behaviour
* Shares up 6 percent
(Adds details)
By Aaron Gray-Block
AMSTERDAM, Nov 20 (Reuters) - Dutch supermarket group Ahold reported on Thursday a higher-than-expected 11 percent rise in core quarterly profit and reiterated its full-year margin target as its earnings turnaround sparked confidence in its 2009 prospects.
Shares in Ahold, which have risen 1.9 percent since it reported second-quarter results on August 28, were up 6.4 percent at 8.51 euros at 1040 GMT, outperforming a 3.8 percent decline in the Amsterdam blue chip index.
Ahold, which generates just over half of its sales in the United States, has been focusing on price cuts at U.S. stores and has benefited as consumers search for bargains amid the economic downturn, along with rivals Wal-Mart Stores and Kroger Co both of which have also reported better-than-expected earnings.
Ahold reported earnings before interest and tax (EBIT) of 262 million euros ($331 million), beating an average forecast of 250.6 million euros from a Reuters poll of 10 analysts. Estimates ranged from 232 million to 265 million euros.
The result reflected an 11 percent rise from last year's 236 million euro operating result, which Ahold restated to strip out divested Schuitema stores in the Netherlands.
"I had expected earnings recovery in one or two quarters, but not in the third quarter so this is encouraging and it bodes well going in to next year," said SNS Securities analyst Richard Withagen.
Ahold Chief Executive John Rishton told reporters the company's turnaround is due to a combination of improved sales, price cuts and lower costs, adding that the repositioning of its U.S. stores was always the best move and particularly relevant given the current economic climate.
He said Ahold will continue to adapt to changing consumer and competitor trends, such as adjusting its supermarket meat sales strategy, but did not fully elaborate on other specific measures.
IMPROVING MARGINS
Ahold, which also owns the Netherlands' biggest supermarket chain, Albert Heijn, reported last month third-quarter sales at the top end of estimates as the revamp of its U.S. stores, which has hurt margins in recent quarters, gained traction.
Ahold said on Thursday its underlying retail operating margin improved in the third quarter to 4.9 percent from 4.8 percent last year and it reiterated its full-year margin guidance of 4.8 percent to 5.3 percent.
Margins improved at Stop&Shop/Giant-Landover stores to 4.3 percent and at Giant-Carlisle stores to 4.6 percent, as operating earnings at both U.S. operations beat estimates, while margins fell to 7.0 percent at Ahold's Dutch flagship chain Albert Heijn.
"The momentum is certainly there and now it's a question of maintaining it," Petercam analyst Fernand de Boer said, adding he is bullish on Ahold's prospects for the fourth quarter and the first half of 2009.
SNS Securities analyst Withagen said he expected Ahold's earnings growth in the Netherlands will slow in 2009, but added that its margins and earnings growth is still good.
Ahold has streamlined its business in recent years, divesting its U.S. Foodservice operations in 2007 after an accountancy scandal and focused instead on improving its U.S. retail operations and gaining market share in the Netherlands.
Ahold booked 12 million euros in one-off costs in the quarter related to the rebranding of its U.S. stores and the 58 Schuitema stores it retained, but added that costs related to the Schuitema integration will continue into the fourth quarter.
Ahold's Dutch rival Super de Boer, majority-owned by France's Casino, said last month third-quarter sales growth doubled to 4.1 percent, due to rising food prices.
Ahold has so far held back from fully passing on higher costs to consumers, Petercam's De Boer said.
Ahold's stock trades at 12.5 times forecast 2009 earnings, compared with Wal-Mart's 15.3 times, Kroger's 14.1 times and French Carrefour's 11.3 times, Reuters data showed. (Editing by Rupert Winchester)